UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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PATRICK BARNICLE, on Behalf of Himself
and Others Similarly Situated,
Plaintiff,
vs.
MELLANOX TECHNOLOGIES, LTD, EYAL
WALDMAN, MICHAEL GRAY and JACOB
SHULMAN,
Defendants.
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Case No. 13-cv-00925 (AKH)
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VALENTIN PETROV, Individually and On
Behalf of All Others Similarly Situated,
Plaintiff,
vs.
MELLANOX TECHNOLOGIES, LTD, EYAL
WALDMAN, MICHAEL GRAY and JACOB
SHULMAN,
Defendants.
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Case No. 13-cv-01225 (AKH)
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DAVID R. RYAN, JR., Individually and on
Behalf of All Others Similarly Situated,
Plaintiff,
vs.
MELLANOX TECHNOLOGIES, LTD, EYAL
WALDMAN, MICHAEL GRAY and JACOB
SHULMAN,
Defendants.
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Case No. 13-cv-01047 (AKH)
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MEMORANDUM IN FURTHER SUPPORT OF THE MOTIONS OF
EISENBERG O. MANAGEMENT & CONSULTING LTD. AND THE
MELLANOX INSTITUTIONAL INVESTOR GROUP FOR APPOINTMENT
AS LEAD PLAINTIFF AND APPOINTMENT OF LEAD COUNSEL, AND
IN RESPONSE TO COMPETING MOTIONS
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 1 of 12
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Eisenberg O. Management & Consulting Ltd. (“Eisenberg”), Harel Provident Funds and
Education Funds Ltd., Harel Atidit Provident Funds Ltd., Harel Pension Fund Management
Company Ltd., Israeli Shares Partnership, and Dikla Insurance Company Ltd. (collectively,
“Harel”); Clal Insurance Ltd., Clal Pension and Provident Fund Ltd. and Atudot Pension Fund
for Employees and Independents Ltd. (collectively, “Clal”); and, Menora Mivtachim Pension
Ltd., Menora Mivtachim Insurance Ltd. and Menora Mivtachim and Histadrut Hamehandesim
Management Provident Funds Ltd. (collectively “Menora” and, together with Harel and Clal, the
“Mellanox Institutional Investor Group”) (collectively, altogether, “Movants”) respectfully
submit this memorandum of points and authorities in further support of their motions for
(1) appointment as Lead Plaintiffs pursuant to Section 21D(A)(3)(B) of the Securities Exchange
Act of 1934 (the “Exchange Act”), 15 U.S.C. § 78u-4(a)(3)(B), as amended by the Private
Securities Litigation Reform Act of 1995 (the “PSLRA”); and (2) approval of their selection of
Cohen Milstein Sellers & Toll PLLC (“Cohen Milstein”) and Pomerantz Grossman Hufford
Dahlstrom & Gross LLP (“Pomerantz”) as Co-Lead Counsel.
INTRODUCTION
Presently pending before the Court in the above-captioned cases1 are two motions
seeking appointment as lead plaintiff and approval of lead counsel, namely motions filed by
(1) Eisenberg and (2) the Mellanox Institutional Investor Group.2
1 The Mellanox Institutional Investor Group filed a motion to consolidate Case No. 13-
cv-00925 (AKH), Case No. 13-cv-01225 (AKH), and Case No. 13-cv-01047 (AKH), while
Eisenberg separately filed its motion to be appointed lead plaintiff in each case.
2 A third movant, Shailesh Kadakia, MD, filed three separate motions to appoint Saxena
White, P.A. (Dkt. 7), Faruqi & Faruqi LLP (Dkt. 19), and Berstein Liebhard (Dkt. 12) as lead
counsel. Kadakia withdrew two motions on April 9, 2013 (Dkt. 29) and April 12, 2013
(Dkt. 33), and then Berstein Liebhard filed a Notice of Non-Opposition to Competing Motions
on April 24, 2013 (Dkt. 37). The fourth movant for appointment as lead plaintiff, KBC Asset
Management NV, filed its Non-Opposition Response to Competing Motions for Appointment as
Lead Plaintiff on April 25, 2013. Dkt. 39.
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 2 of 12
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Recognizing that they both possess a substantial financial interest in the outcome of this
Action, that both possess claims typical of the Class, and that both are more than adequate to
represent the Class, Eisenberg and the Mellanox Institutional Investor Group respectfully request
that the Court appoint them to serve jointly as Lead Plaintiffs in this Action. Movants are a
small group comprised of four institutional investors and their subsidiary entities, all of which
are headquartered in Israel, and can thus easily and efficiently work together. See Mellanox
Institutional Investor Group and Eisenberg O. Management & Consulting Ltd.’s Joint
Declaration in Support of Stipulation for [Proposed] Order Appointing Lead Plaintiffs and
Approving Co-Lead Counsel (“Joint Decl.”)3 at ¶¶ 8-10 (attached to the Declaration of S.
Douglas Bunch in Further Support of the Motions of Eisenberg O. Management & Consulting
Ltd. and the Mellanox Institutional Investor Group for Appointment as Lead Plaintiff and
Appointment of Lead Counsel (“Bunch Decl.”) at Ex. 1). Eisenberg and the Mellanox
Institutional Investor Group are committed to a zealous, yet efficient, prosecution of this case
and intend to be actively involved in this litigation through their commitment to joint decision-
making and agreed-upon procedures for oversight of and communication with their counsel. See
Joint Decl. at ¶ 11. Movants believe their appointment as Lead Plaintiffs will benefit the pursuit
of their claims and those of Class members due to Movants’ cohesive nature, geographic
proximity, and history of support of similar causes (Joint Decl. at ¶¶ 9-11) as well as the
PSLRA’s preference for institutional investors and permissive appointment of groups. See infra,
Sections I.(b)2. & 3.
Finally, all other movants for lead plaintiff have either voluntarily withdrawn their
motions or filed a notice of non-opposition to the remaining motions, which underscores the
3 Due to logistical difficulties, there has been a delay in obtaining Clal’s signature.
Pomerantz and Cohen Milstein will file it promptly upon receipt.
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 3 of 12
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eminent propriety of the appointment of Eisenberg and the Mellanox Institutional Investor Group
as Lead Plaintiffs. Doing so eliminates the need for further litigation on the pending motions and
related costs and delay, and serves Class members’ interest in proceeding with prosecution of
their claims.
The plain language of the PSLRA specifically instructs that the Court “shall appoint as
lead plaintiff the member or members of the purported plaintiff class that the court determines to
be the most capable of adequately representing the interests of the class members.” 15 U.S.C. §
78u-4(a)(3)(B)(i) (emphasis added). The presumptive lead plaintiff, i.e., the one most capable
of adequately representing the class, is the one who “has the largest financial interest in the relief
sought by the class” and who “otherwise satisfies the requirements of Rule 23 of the Federal
Rules of Civil Procedure.” 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb)-(cc). Here, there is no doubt
that Movants have the largest financial interest in the relief sought by the Class. Eisenberg and
the Mellanox Institutional Investor Group had the most, and second-most, financial losses among
all the movants for lead plaintiff who initially filed.
Moreover, Eisenberg and the Mellanox Institutional Investment Group satisfy the
typicality and adequacy requirements of Rule 23. Movants have submitted signed certifications
indicating their transactions in the shares of Mellanox Technologies, Ltd. (“Mellanox” or the
“Company”) which are at issue in this case, and have attested to their willingness to serve as
representative parties on behalf of the Class. See Joint Decl. at ¶¶ 6, 11. Additionally,
Eisenberg’s and the Mellanox Institutional Investor Group’s claims are typical of those of the
Class, as Movants’ claims are predicated on the same operative facts and course of conduct
which damaged the rest of the Class. Movants purchased Mellanox shares throughout the Class
Period and suffered substantial losses as a result thereof. See Joint Decl. at ¶ 6. By providing
signed certifications and a supplemental declaration, Movants have demonstrated they are aware
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 4 of 12
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of the obligations that accompany their appointment as Lead Plaintiffs and are ready, willing,
and able to vigorously pursue and fully participate in this litigation on behalf of the Class. See
Joint Decl. at ¶¶ 9-11.
Accordingly, because Eisenberg and the Mellanox Institutional Investor Group maintain
the largest financial interest and readily meet their burden under Rule 23, they are, together, the
“presumptively most adequate plaintiff” under the statutory requisites of the PSLRA and should
be appointed by the Court as Lead Plaintiffs for the Class. 15 U.S.C. § 78u-4(a)(3)(B)(iii)(II).
Furthermore, Movants have selected the law firms of Cohen Milstein and Pomerantz as proposed
Co-Lead Counsel, subject to Court approval. Both law firms have extensive experience in
securities class action litigation and are well-qualified to prosecute this Action. Moreover,
Movants are aware that Cohen Milstein and Pomerantz have previously been appointed as lead
counsel together, and have already exhibited an ability to work together in an efficient fashion in
the class’s best interests. See Joint Decl. ¶ 12. Accordingly, Movants’ lead counsel selection
should be approved by the Court.
ARGUMENT
I. Eisenberg and the Mellanox Institutional Investor Group Are the Most Adequate
Plaintiffs and Should Be Appointed Lead Plaintiffs
Within the Second Circuit, the procedure for appointing lead plaintiff is as follows:
Pursuant to the PSLRA, the Court “shall appoint as lead plaintiff
the member or members of the purported plaintiff class that the
Court determines to be most capable of adequately representing the
interests of class members .... The PSLRA creates a “rebuttable
presumption” that the “most adequate plaintiff” “is the person or
group of persons” who “has the largest financial interest in the
relief sought by the class,” provided that such person or persons
satisfies Rule 23’s requirements.
In re CMED Sec. Litig., No. 11 Civ. 9297 (KBF), 2012 WL 1118302, at *2-3 (S.D.N.Y. Apr. 2,
2012) (appointing a group, comprised of an individual and institutional investor, as lead plaintiff)
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 5 of 12
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(citations omitted). As demonstrated below, Eisenberg and the Mellanox Institutional Investor
Group have shown that they have the largest financial interests in this case and also satisfy
Rule 23’s adequacy and typicality requirements.
(a) Eisenberg and the Mellanox Institutional Investor Group Have the Largest
Financial Interests in the Relief Sought by the Class
Pursuant to the PSLRA, the Court must first determine which of the competing movants
has the “largest financial interest” in the litigation. See 15 U.S.C. § 78u-4(a)(3)(B)(iii)(I)(bb);
see also In re Elan Corp. Sec. Litig., No. 1:08-cv-08764-AKH, 2009 WL 1321167, at *1-2
(S.D.N.Y. May 11, 2009) (Hellerstein, J.) (appointing plaintiff because it “appear[ed] to have a
greater financial interest” through its larger financial losses and its purchase of a higher number
of shares). As shown in previous filings, Eisenberg and the Mellanox Institutional Investor
Group had the highest and second-highest financial stakes in this litigation as measured by
numbers of shares purchased, expenditures and losses.
Shares
Purchased
During Class
Period
Net Shares
Purchased Net Expenditures
LIFO
Loss/(Gain)
Eisenberg 2,566,667 1,531,072 $ 132,457,153.69 $ 48,533,408.12
Mellanox Institutional
Investor Group 2,353,615 2,207,359 $ 164,372,498.26 $ 47,704,934.00
According to the table above, Movants clearly possess a substantial financial stake in this
Action, and easily satisfy the PSLRA’s intention of ensuring zealous prosecution of the Class’s
claims.
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(b) Eisenberg and the Mellanox Institutional Investor Group Satisfy Rule 23
Requirements and Should Be Appointed Lead Plaintiffs
“As for satisfying the requirements of Fed. R. Civ. P. 23, ‘[a]t this stage of the litigation,
the moving plaintiff is only required to make a preliminary showing that the adequacy and
typicality requirements have been met.’” In re Elan Corp., 2009 WL 1321167, at *2 (citation
omitted). Eisenberg and the Mellanox Institutional Investor Group have more than met this
burden.
1. Eisenberg’s and the Mellanox Institutional Investor Group’s Claims Are
Typical of Those of Other Class Members
“Typicality exists where each class member’s claim “arises from the same course of
events, and each class member makes similar legal arguments to prove the defendant’s liability.”
Id. (citing In re Drexel Burnham Lambert Grp., Inc., 960 F.2d 285, 291 (2d Cir. 1992)).
“Typicality of claims exists … even if some ‘minor variations’ exist in the factual allegations
asserted by different class members,” and, as such, “need not be identical to the claims alleged
by other class members.” Constance Szcesny Trust v. KPMG LLP, 223 F.R.D. 319, 324
(S.D.N.Y. 2004) (citation omitted). In assessing typicality, “the Court scrutinizes (1) whether
the proposed class counsel is ‘qualified, experienced, and generally able to conduct the
litigation’; (2) whether the proposed lead plaintiff has interests that are antagonistic to other class
members; and (3) whether the proposed lead plaintiff and the class possess sufficient interest to
pursue vigorous prosecution of their claims.” Id. (citations omitted).
Here, Eisenberg’s and the Mellanox Institutional Investment Group’s claims are typical
of the Class because Movants purchased Mellanox shares relying on the same false and
misleading statements relied upon by other Class members, and, like other Class members,
incurred damages as a result of the Defendants’ violations of the federal securities laws. The
interests of Eisenberg and the Mellanox Institutional Investment Group are closely aligned with
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those of other Class members and they are, therefore, typical of the other members of the Class.
Finally, Movants have proposed amply qualified law firms for appointment as Lead Counsel.
2. Eisenberg and the Mellanox Institutional Investment Group Will
Adequately Represent the Class
“In assessing adequacy, the court should consider: ‘(1) the size, available resources and
experience of the proposed lead plaintiff; (2) the qualifications of the proposed class counsel; and
(3) any potential conflicts or antagonisms rising among purported class members.’” In re Elan
Corp., 2009 WL 1321167, at *2 (citation omitted).
Eisenberg and the Mellanox Institutional Investor Group have represented that they will
protect the interests of the Class, as reflected in their Joint Declaration affirming their interest in
serving as Lead Plaintiffs in this Action, and they are not aware of any antagonism between their
interests and those of the Class. With a vast amount of money at stake in this case, Eisenberg
and the Mellanox Institutional Investor Group are extremely motivated to pursue the claims in
this Action. See Joint Decl. at ¶¶ 6-7, 10-11.
As sophisticated and institutional investors, moreover, Movants are precisely the type of
lead plaintiffs envisioned by Congress when it enacted the PSLRA. See H.R. Conf. Rep. No.
104-369, at 34 (1995) (“The Conference Committee believes that increasing the role of
institutional investors … will ultimately benefit shareholders and assist courts by improving the
quality of representation in securities class actions.”). “According to Congress, institutional
investors appointed as lead plaintiffs would be the most competent plaintiff to select and control
lead counsel.” Moore’s Federal Practice § 23.191[3][b][v]. In fact, “Congress clearly
envisioned that various financial institutions – pension funds, insurance companies, and mutual
funds – were the most likely types of investors who could combine a large financial stake in the
suit’s outcome with the sophistication to guide the suit to an appropriate result.” James D. Cox
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& Randall S. Thomas, “Does the Plaintiff Matter?,” 106 Columbia L. Rev. 1587, 1588-89
(November 2006); see also Glauser v. EVCI Career Colls. Holding Corp., 236 F.R.D. 184, 188
(S.D.N.Y. 2006) (“[T]he PSLRA was passed, at least in part, to increase the likelihood that
institutional investors would serve as lead plaintiffs in actions such as this one.”) (quoting In re
Veeco Instruments, Inc., 233 F.R.D. 330, 332-33 (S.D.N.Y. 2005)); Malasky v. IAC/Interactive
Corp., No. 04 Civ. 7447 (RJH), 2004 WL 2980085 (S.D.N.Y. Dec. 21, 2004) and Malasky v.
IAC/Interactive Corp., No. 04 Civ. 7447 (RJH), WL 549548 (S.D.N.Y. Mar. 7, 2005)
(appointing, along with the individual lead plaintiff with the largest sole financial loss, an
institutional investor as co-lead plaintiff).4
3. Appointment of Investor Groups is Proper Under the PSLRA
Eisenberg and the Mellanox Institutional Investor Group are a small, cohesive group of
four substantial investors and their subsidiaries. Their cohesive nature, geographic proximity,
history of support of similar causes, and aligned interests, as well as their substantial resources,
position them as appropriate candidates for appointment, together, as Lead Plaintiffs. Indeed,
“[t]he rebuttable presumption created by the PSLRA which favors the plaintiff with the largest
financial interest was not intended to obviate the principle of providing the class with the most
adequate representation and … [a]llow[s] for diverse representation … [which] ensures that the
4 Eisenberg’s and the Mellanox Institutional Investor Group’s status as foreign
institutional investors, moreover, does not detract from their adequacy where, like other
members of the Class, they purchased shares of Mellanox on the NASDAQ, a domestic
exchange. Since enactment of the PSLRA, courts have regularly appointed foreign institutional
investors to serve as lead plaintiffs. The Supreme Court’s decision in Morrison v. Nat’l
Australia Bank Ltd., 561 U.S. ___, 130 S. Ct. 2869 (2010), does not change the propriety of
doing so in any way. Morrison only impacted the ability of foreign investors (and arguably U.S.
investors) to bring federal securities claims where the underlying securities at issue were
purchased on a foreign exchange, which, of course, is not the case here. See Foley v. Transocean
Ltd., 272 F.R.D. 126, 133-34 (S.D.N.Y. 2011) (holding that “nothing in [Morrison] provides any
support for the notion that foreign investors are not adequate plaintiffs in United States courts
when the securities at issue were purchased on a United States exchange,” and appointing a
Danish pension fund lead plaintiff).
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interests of all class members will be adequately represented in the prosecution of the action and
in the negotiation and approval of a fair settlement.” In re Oxford Health Plans, Inc. Sec. Litig.,
182 F.R.D. 42, 49 (S.D.N.Y. 1998) (appointing a state pension fund, significant individual
investors and a large institutional investor as co-lead plaintiffs). Many district courts have
approved of cooperative solutions proposed by groups of investors that filed competing motions
but later joined together recognizing they had the largest financial interests of any of the other
movants. See Montoya v. Mamma.com Inc., No. 05 Civ. 2313 (HB), 2005 WL 1278097, at *1-2
(S.D.N.Y. May 31, 2005) (Baer, J.) (appointing two co-lead plaintiffs each comprised of a group
of investors which had the largest and second largest financial interest of any of the movants in
the case); see also Minneapolis Firefighters’ Relief Assoc. v. Medtronic, Inc., 278 F.R.D. 454 (D.
Minn. 2011); In re Able Labs. Sec. Litig., 425 F. Supp. 2d 562 (D.N.J. 2006); In re Hospira, Inc.
Sec. Litig., No. 11-cv-08332 (N.D. Ill. April 18, 2012) (minute order appointing multiple
institutional investors to serve as lead plaintiffs).
II. The Court Should Approve Eisenberg’s and the Mellanox Institutional Investor
Group’s Choice of Co-Lead Counsel
The PSLRA states that the “most adequate plaintiff shall, subject to the approval of the
court, select and retain counsel to represent the class.” See 15 U.S.C. § 78u-4(a)(3)(B)(v). Here,
Movants have selected Cohen Milstein and Pomerantz to serve as Co-Lead Counsel for the
Class. Both law firms have extensive experience in the area of shareholder litigation, and both
have successfully litigated numerous securities class actions and are well-qualified to serve as
Co-Lead Counsel. See Dkt. 17 at Ex. D (Cohen Milstein’s firm resume); Dkt. 24 at Ex. E
(Pomerantz’s firm resume). Cohen Milstein and Pomerantz have served as lead counsel in
numerous securities fraud actions in this District for many years and before many of this
District’s judges; additionally, they currently serve as co-lead counsel in a securities class action
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litigation. Bruce v. Suntech Power Holdings Co. Ltd., No. CV 12-4061 RS, 2012 WL 5927985,
at *3 (N.D. Cal. Nov. 13, 2012) (appointing lead plaintiff and appointing Cohen Milstein and
Pomerantz as co-lead counsel). Thus, the Court may be assured that by granting Eisenberg’s and
the Mellanox Institutional Investor Group’s motion, the Class will receive the highest caliber of
legal representation.
CONCLUSION
For the additional foregoing reasons, Eisenberg and the Mellanox Institutional Investor
Group respectfully request that the Court: (i) appoint them as Lead Plaintiffs pursuant to Section
21D(a)(3)(B) of the Exchange Act, as amended by the PSLRA, 15 U.S.C. § 78u-4; and
(ii) approve their selection of the law firms Cohen Milstein and Pomerantz to serve as Co-Lead
Counsel pursuant to 15 U.S.C. § 78u-4(a)(3)(B)(v). For the Court’s convenience, Eisenberg and
the Mellanox Institutional Investor Group have attached a Stipulation for [Proposed] Order
Appointing Lead Plaintiffs and Approving Co-Lead Counsel. See Bunch Decl., Ex. 2.
Dated: April 25, 2013 Respectfully submitted,
COHEN MILSTEIN SELLERS
& TOLL PLLC
/s/ S. Douglas Bunch
Steven J. Toll
Daniel S. Sommers
S. Douglas Bunch (SB-3028)
Genevieve O. Fontan (GF-1906)
1100 New York Avenue, N.W.
West Tower, Suite 500
Washington, DC 20005-3964
Telephone: (202) 408-4600
Facsimile: (202) 408-4699
Case 1:13-cv-00925-AKH Document 41 Filed 04/25/13 Page 11 of 12
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Michael Eisenkraft (ME-6974)
88 Pine Street, Fourteenth Floor
New York, New York 10005
Telephone: (212) 838-7797
Facsimile: (212) 838-7745
Attorneys for Movant Eisenberg O. Management
& Consulting Ltd. and Proposed Co-Lead Counsel
for the Class
Jacob Sabo
LAW OFFICE OF JACOB SABO
# 3 Daniel Frisch St. (24th floor)
Tel-Aviv 64731
Telephone: 03-7161555
Facsimile: 03-7161556
Attorney for Movant Eisenberg O.
Management & Consulting Ltd.
Marc I. Gross
Jeremy A. Lieberman
POMERANTZ GROSSMAN HUFFORD
DAHLSTROM & GROSS LLP
600 Third Avenue, 20th Floor
New York, New York 10016
Telephone: (212) 661-1100
Facsimile: (212) 661-8665
Patrick V. Dahlstrom
Ten South LaSalle Street, Suite 3505
Chicago, Illinois 60603
Telephone: (312) 377-1181
Facsimile: (312) 377-1184
Attorneys for Movant the Mellanox Institutional
Investor Group and Proposed Co-Lead Counsel for
the Class
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